3D printed housing is a fast-growing market with an annual growth rate of over 200%. The market is projected to be worth over 1.5 billion USD by 2024 in the US alone (source). This presents a great opportunity for buyers to grow their assets by investing in 3D printed houses.
However, due to market volatility and recent financial hits, the future is uncertain and there is a growing concern about the longevity of the market. Housing, in general, has been getting more expensive, but the story is a bit different for 3D printed houses.
So, is the 3D printed housing market stable? Yes, given the current trends it is, it seems that it will rise in value in the future as well. Since the technology is novel and still very much in development, not a lot can be said about the pricing of the houses, but overall, the market cap of the industry is showing a positive trend.
One important distinction that we need to make is that, unlike conventional houses, 3D printed applications are yet to be constructed on a large enough scale to be considered viable investment options.
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In addition to that, they have not been around for a long enough time for there to be conclusive data available on their success rate as an investment.
So, the figures and data in this article are deductive and speculative in nature and that is something that you should be aware of whenever a new technology is being analyzed.
Why are 3D printed houses cheaper than conventional ones?
This has a lot to do with the differing nature of both markets. The housing market is seen as an investment opportunity all over the world, as returns are high, and it is a safe way for most people to build their assets.
3D printed houses, on the other hand, are often seen as the opposite. They are the cheaper, quicker, more reliable solution to conventional homes that have become unaffordable for most people.
One of the consequences of economies treating houses as investments are that they are now seen as assets rather than commodities. This has resulted in the explosion of housing prices and governments across the globe are facing massive housing crises.
Housing is essential to human survival and yet there are almost 1.6 billion people that have inadequate housing (source). In the US alone, housing prices have almost doubled in the last decade. (source)
(Check out this article that has an in-depth breakdown of affordable 3D printed houses. Go read it to learn more!)
3D printed houses are the alternative to this approach. Since governments are always finding cheaper and more efficient ways to build homes, 3D printed houses present themselves as the perfect solution.
They are cheap, easily replicable, quickly built, and can be optimized to almost any shape and/or size. It’s the very nature of 3D printed houses that makes them cheap and they are meant to be adopted as such.
In other words, the biggest selling point of 3D printed houses is their affordability and their ease of construction. That is why they probably will never be as competitive a market as conventional houses.
However, that is not the case with all 3D printed houses.
Are there 3D printed houses with competitive market values?
The 3D printed housing industry is well aware of investors’ interest in the housing market and there are options available.
Companies have projects that are entirely dedicated that appeal to investors, as this provides companies with the opportunity to generate revenue and make capital gains early on.
For instance, ICON (a company based in Austin, Texas) is selling houses for up to 750,000 USD. These come in different configurations (for bedrooms and bathrooms), and they closely match the median house price in the state.
SQ4D, (based in New York) also has a housing project in Long Island that has houses listed for up to 300,000 USD. These houses are the first of their kind and currently are the largest 3D houses listed on the market with a certificate of occupancy. (Source)
Likewise, there are several other companies in the US and abroad that are working on similar projects that have the prospects to become successful investments.
Do 3D printed houses depreciate?
As stated in the beginning, this is a difficult question to answer since there is not too much data to work with. The technology is relatively new and in its early stages of development. There is also very limited real-life application.
However, if current market trends are to be observed, we can make a logical correlation and apply it to the 3D printed housing market as well.
Before we look at the data, let’s take a quick look at what depreciation actually is. In the US, depreciation is measured at an annual rate of around 3.6% for 27.5 years.
What this means is that the property will depreciate 3.6% of its value every year for 27.5 years, till it’s considered to be completely depreciated. This rate is set for residential properties and the figures may vary for other kinds of properties.
The depreciation does not take the land value into account, but just the value of the property built on top of it. This is an important consideration because a lot of houses are marketed with the value of the land included in the cost.
Since 3D printed houses, much like conventionally built houses, are depreciating assets, we can apply a depreciation rate similar to conventional houses. This means that 3D printed houses’ depreciation is closely matched by the depreciation of conventionally built houses.
There is one factor that is in the favour of 3D printed houses. Depreciation is generally calculated based on the assumption of natural loss of value. This means that the house is regularly maintained, but not completely overhauled throughout its life.
This is generally true in the case of conventionally built houses, since repairing them is expensive and resource-intensive. It is often more sensible and cost-effective to just tear down the old house and build a new one from scratch.
This is where 3D printed houses are different. Since their construction and overall design are much simpler, they are easy to repair and overhaul. This means that they can be repaired more frequently, and their service life can be increased, which reduces their depreciation rate.
The efficient nature of 3D printed houses, particularly in their construction method, also makes the repairs and overhauls much cheaper and more cost-effective.
Even if a house is to be torn down and built from the ground up, it would be much cheaper to construct a 3D printed house rather than a conventional one.
What factors affect the market value of 3D printed homes?
Market values are determined by a multitude of factors and that is especially true for housing. Housing prices significantly affect the standard of living and are fundamental to ensuring the prosperity of a society.
That is why we need to look at the factors that affect housing prices and examine the close link they have to our daily lives.
The number one factor affecting housing prices is supply and demand. In countries with high populations, this is a constant battle that the governments have to fight where there are not enough houses to inhabit their populations.
The demand for housing is high whereas the supply of affordable housing is not matched by it. This drives the prices up and causes more constraints on people looking to buy a place to live.
The second factor has to do with economic growth. In developed countries like the US, where the economy is growing and employment is rising, more people have the resources to buy houses.
This again increases the demand for houses and when it is met with an inadequate supply, it causes the prices to rise.
Another factor that has a huge impact on housing prices is economic stability. Since housing markets form a huge part of a country’s economy, they are usually the first ones to take a hit whenever the economy is destabilized.
Covid-19 is a recent example in which the housing market took a hit and investors had to suffer losses during the recession.
The last factor has to do with resources and geography. A major component that affects housing prices is the location of the property.
This includes aspects such as infrastructure availability (roads and public transport), climate, distance to the city center, and closeness to facilities (such as retail shops, markets, schools, hospitals, etc.) among other things.
All these factors also apply to 3D printed houses, and they play a pivotal role in determining their market value.
(If you want to read more about the cost of 3D printed houses, click on this article here!)